Cloud or in-house server? 5 things SMBs must think about



We live in a world where cloud computing is fast becoming the norm, which has become particularly useful with the need for homeworking recently, and with customers massively increasing their use of online services and purchasing. However, it’s important to remember that cloud solutions are not the only options you should consider.

The reality is that businesses have different needs. For some, there are important reasons why they choose to run on-premises physical servers, rather than going 100 percent to the cloud. For example, in-house servers can provide a stable foundation onto which you can then add cloud services, as and when you need them. In periods of change, on-premise computing can give you the business continuity, control and security you need.

To help you decide, here are five things to consider when looking at on-premise versus cloud.

1. Price

While entry-level web hosting is cheap, rental costs can ramp up quickly if you need to add higher capacity, or more users, to the service. This can make buying more cost-effective than renting. This is important because IDG research from January 2020 found that IT investment will be a modest 39% of SMB, and minimal for 26%. With businesses challenged recently, pricing is an even more sensitive issue that it was earlier in the year.

Furthermore, in terms of the Capex versus Opex argument, which is that cloud can shift your costs from capital to operational, it's worth noting that hardware costs are constantly falling. So, organisations could, in fact, get greater value out of buying server, storage and networking hardware, and running and maintaining it themselves.

2. Bandwidth

Cloud-based services can give you flexible access to applications. They also offer powerful scalability, harnessing the processing power of multiple cloud-based servers as and when needed. This is great for peaks in demand, such as the massive increase in online sales during lockdown, for example, where you can simply scale services up or down as you need them.

But, for data-intensive applications, cloud can produce bottlenecks, unless you have really good internet access. And sometimes, internet service providers (ISPs) can experience service outages or downtime particularly when demand for bandwidth is high, as it has been with so many homeworkers and home-schoolers. This means businesses can’t access emails, data or applications until the service is restored.

On the other hand, in-house servers, running on a local area network, can deliver services that are far more reliable: a strong argument for going on-premise, particularly if you have had to transition to a home-based workforce, or if you plan to continue supporting home-working going forward.

3. Long term

Another benefit of using your own hardware is you can customise and tailor it to your requirements; add additional features when you want; and build an IT system for the long term. According to research from SMB industry analyst Techaisle from March 2020, 79% of SMBs are moving towards digital transformation.

You also have the flexibility of scaling your own hardware and software when you need to, by adding extra capacity. Of course, you can do this with cloud, but it requires finding and agreeing the right service contract with the right service provider.

4. Compliance and privacy

Most cloud service providers offer excellent security. They also have the resources and expertise to ensure their products comply with specific industry and data regulations. However, in an uncertain world, some organisations may feel they have greater control over their data and systems if they are on-premises.

However, do keep in mind that to adequately secure and maintain sensitive or critical data does require an investment in time, technology and personnel.

5. Specific use cases

Many applications and use cases are perfectly suited to cloud, from email and web hosting to serving applications and sharing documents. But others are not. For example, data-intensive operations, such as video production, or heavy database usage, may run better from on-premises servers. In addition, legacy applications that link to current apps may run better on premises rather than being orchestrated with apps running in cloud environments.

In summary, there are good arguments for both cloud and on-premise servers. In-house often beats cloud on cost. Plus, it can give you more reliable bandwidth, and you can custom-build your own long-term systems.

On the other hand, cloud can offer good compliance, privacy and security, and there are lots of applications to choose from.

Overall, for each application, try to work out if it’s best suited to the cloud, or an in-house server. For most businesses, a combination of the two will be the answer. Whichever you choose, Dell’s Technologies Advisors are on hand to help.